If you think that filing for bankruptcy will solve all your debt problems, you are being misled. Bankruptcy filing can come to haunt you for years and that is why this decision should be taken after careful analysis and deliberation. Plus, you should do your research to explore other bankruptcy alternatives, like debt consolidation, loan deferment, grace periods, etc., as a way to avoid filing bankruptcy.

No one ever wants to file for bankruptcy, because your credit history is ruined for possibly up to 10 years. That means that you may not be able to apply for credit, rent apartments, secure jobs, order utilities, etc.

Bankruptcy does not mean that your debt will be wiped out and you will become debt-free and start fresh. Unfortunately that is the impression most people have and it is not correct. You may be able to lower or even eliminate some bills, but it comes at a heavy cost.

Another disadvantage to bankruptcy is that banks and other financial institutions will exploit you by charging a higher rate of interest. It will take years of good financial management to become 'clean' again.

There are many ways to avoid bankruptcy. One of the most standard ways is to do your research by exploring what other alternatives are available to you. You must speak to your creditors to see if you can work out a different payment plan while you solve your financial problems. For instance, if you lose your job and are unable to make some payments, and if you have a good credit history, most financial institutions will work out an arrangement under which you can avoid making full payments till you secure a job.

Some other ideas are to explore options for debt consolidation. Debt consolidation can be defined by the action of combining several loans or liabilities into one loan. Put another way, debt consolidation is the process of taking out a new loan to pay off a number of other debts. Most people who consolidate their debt are usually doing it to attain a lower interest rate, or the simplicity of a single loan.

You will need to make lifestyle changes as well. For instance, you may have 200 channels of cable television but might only watch it a couple of hours a week. There are a lot of good programs on regular channels that you can watch and entertain yourself. Similarly, stop buying coffee in the morning (buy your own coffee and brew some fresh each morning at home). Limit how many times you go out to eat, bring your own lunch box to work, avoid unnecessary trips in the car, don't talk too long on the phone, and avoid any waste that you see in your life.

Save money all the time and spend less than you earn. Its a well-known saying that the more you save, the better off you will be. Buy insurance, particularly health insurance. The benefits of health insurance are innumerable and are well worth the cost.